As industries attempt to reduce greenhouse gas emissions from burning oil and coal, natural gas is becoming increasingly popular
around the world – and is indeed widely
used among district energy systems.

Canada is one of the top suppliers of
natural gas. Here, we take a look at the
current state of the natural gas market.

It seems like only a few years ago
that the dominating conversation in the
energy industry was the upcoming “
fossil fuel crisis” – as demand greatly outweighed supply, the world was bracing
for the inevitable day when we would
exhaust our stores and be plunged into
a dark era of skyrocketing prices and
wars for the “liquid gold.” However, in
North America at least, we currently find
ourselves with the opposite problem:
Advances in extraction technologies have
increased the supply of fossil fuels and
sharply driven down the price.

IN A NATURAL RESOURCE-HEAVY ECONOMY
SUCH AS CANADA’S, THE RECENT FALL OF
NATURAL GAS PRICES IS BOUND TO CREATE
GROWING PAINS.

The recent fall of natural gas prices
is no doubt welcome to many consumers, but in a natural resource-heavy economy such as Canada’s, these changes are
bound to create growing pains. As Canada
begins to court new markets, we have to
ask ourselves, Have we waited too long?
And what are the hidden costs of extending our natural gas reach?

Canada is the world’s fifth-largestproducer and fourth-largest exporter ofnatural gas, 1 after the United States (theincrease5 as it moves away from coal.India and other Southeast Asian mar-kets are also expected to ramp up theirdemand for natural gas considerably inthe years to come. Although the UnitedStates is expected to fulfill the majorityof this demand, there may be an opportu-nity for Canadian producers.

One project, LNG Canada, is a joint
venture among Shell, Petronas, Petro-China, Mitsubishi and KOGAS. Given
the green light by the project partners
in October 2018, the ambitious plan is
to construct a 670-km (420-mile) gas
pipeline (the Coastal GasLink Pipeline)
through Northern British Columbia from
the Montney Formation gas fields near
Dawson Creek, B.C., to a planned gas liq-uefication and storage plant in the port
of Kitmat, B.C. From there, the LNG will
be shipped to Asian customers. The total
investment will be CAN$40 billion, the
largest private-sector investment in Canadian history. The project is expected to
generate CAN$23 billion in new revenues
to the Crown and create 100 permanent
jobs across the province. 6

The project will initially export 14
million tonnes of LNG per year, with the
goal to ramp up export to 28 million per
year. Using Qatar Petroleum’s conversion
metric of 1 million tonnes of LNG being
equivalent to 1. 36 billion cu m ( 48 billion cu ft), 7 14 million tonnes of LNG is
roughly equivalent to 19 billion cu m (670

billion cu ft) of natural gas, almost bringingCanada back to 2006 export levels.Predicting international demand isn’ta science, however. A previous export plan,the Pacific North West LNG project, was aCAN$36 billion project that receivedapproval from the federal government in2016. Backed by Malaysian oil and Petro-largest world supplier), Saudi Arabia and

Russia. The Canadian Association of Petroleum Producers estimated that in 2015,
250,000 jobs were connected both directly
and indirectly to the natural gas industry with an estimated “[CAN]$2.3 trillion
[$1.73 trillion] in economic impact over the
next 20 years.” 2 Produced primarily in British Columbia and Alberta, and used either
domestically or exported to the United
States, Canadian natural gas has taken a
hit in terms of demand, as the U.S. takes
advantage of new technologies to ramp up
its own domestic production. Not only have
Canada’s exports of natural gas declined
from 100 billion cu m ( 3. 53 trillion cu ft)
in 2006 to 80 billion cu m ( 2.83 trillion
cu ft) in 2018, but the market value of natural gas has also fallen about 60 percent
since 2006.3 Clearly, Canada is in need of a
new strategy.

A naturally occurring hydrocarbon (a
classification also including oil and coal),
natural gas is typically found in reservoirs
in sedimentary rock deep below the surface of the earth. Once processed, the gas
is transported via high-pressured pipelines to local distribution companies
where it is then passed on to homes and
businesses. When chilled to minus 160
degrees C (minus 256 F), natural gas condenses to liquefied natural gas (LNG).
One-six hundredth of its original volume,
LNG is able to be transported via ocean
tankers to foreign markets, where it is
then reheated and converted back into
a gas to be used in other energy markets. 4

Foreign markets are key to addressing the challenge of declining market
sales for Canadian natural gas. Global
demand for LNG is expected to double
in the near future, with China projected
to account for almost 40 percent of this